China halts rare earth minerals to US – Hi-tech affected

A nasty trade dispute appears to have prompted Chinese customs officials to block shipments of rare earth minerals to the U.S.

The move underscores a deepening U.S. vulnerability because of its dependence upon China for tech-crucial rare earth minerals (also known as rare earth elements). Small but significant amounts of the minerals go into creating everything from PCs and cellphones to wind turbines and hybrid cars, as well as U.S. military technologies such as missile guidance systems.

This latest news came from three rare earth industry officials cited by the New York Times. The officials spoke on the condition of anonymity for fear of backlash from China.

China currently controls about 97 percent of rare earth production.

…

U.S. rare earth companies have begun looking to reopen old mines and search for new deposits, but industry experts say that relaunching an independent U.S. supply chain could take 15 years.

The latest Chinese action follows a similar move last month, when China halted shipments to Japan during a political dispute over Japan’s arrest of Chinese fishermen. Among the affected Japanese companies was Toyota, maker of the popular Prius hybrid cars which incorporate the rare earth element neodymium, among others.

I’d say, west should make sure the rare earth metals don’t enter US or EU in any shape, form or mixture and stop all Chinese products containing rare earth elements.
The Chinese are totally devoid of any moral and we need to teach ourselves a lesson not to trust this dictatorship. If not, we risk loosing any industry worth having (well, except agriculture) due to subsidies and within less than two decades we will lack the industrial knowledge to get it back. It is possible that the Chinese will be nice and let our young ones to study at their universities, but then again, they may not. It will be at their discretion.

If the US wanted, they could have a vibrant RE mining industry in 12 months . . just get rid of all the environmental lawyers, the Tides Foundation funded astroturfing “community” groups and tell the EPA to go take a hike.

Just takes political will. If Obozo wants to show he actually has a pair, he’ll seize this opportunity and go totally rogue.

Leave it to the liberals to cast the most negative spin on this. I think this is wonderful news. Now the economic incentive will exist to mine for these and other minerals in allied western countries. Having been smacked on the nose once, we’ll not go back to buying them cheaply from China just because they deign to lift their embargo. Maybe we’ll learn (like South Africa has, in regards to their coal liquifaction) not to depend on the capricious whims of those who have clearly made themselves our enemies.

Oh dear – looks like China is going to be toast! The next few weeks should prove interesting.

An immediate boycott of Chinese goods by NATO countries would bring the burgeoning economy of China to its knees in just a few months. When politicians start to interfere with trade trouble always follows.

I feel very sorry for the Chinese people, who are going to suffer from their rulers arrogance.

Would it be bad form to say “Told you so!” to all of the wingnuts blathering about energy independence. Now, if you don’t mind, stay out of the way, the grown-ups have some oil they need to drill, here! If you want to do something useful, build some refineries.

Now, after we take a moment to think, either some dolts didn’t realize where we got these rare earth minerals from or some one purposefully misled a bunch of people.

German companies say they are being pressed by Chinese officials to increase their investments in China if they want to be assured of access to rare earth minerals and two other obscure elements, tungsten and antimony. China dominates the mining of these metals.”

Its all about capitalist extremism, outsource those skills and resources for profit while people sit and watch American Idol. When do we begin to put a little pride in ourselves rather than prostitute jobs, resources and skills for the almighty buck.

Let’s not be too hard on China. They warned ahead of time that this was coming to avoid shortfalls in their own domestic use. Also, many of the rare earth devices that we use in the west are made in China, so, no problem with the embargo unless they extend it to Chinese manufactured goods.

Also, this is *great* news for mining and manufacturing in the U.S. The U.S. was once a leading supplier and can be again. I heard we shut down because the Chinese prices were too good to compete with. Now that those days are over, back to the same old.

Good luck producing any REE from future mines here in the US–I quit the mining business largely because of the difficulty in getting signoff from the vast number of competing jurisdictions–often complying with one put you out of compliance with another. It will probably take a literal Act of Congress to get sufficient supply of these minerals here domestically.

My guess is this is as a result of what Geithner said in Palo Alto, about the Chinese manipulating their currency, which they are.

If they pursue this, they will end up shooting themselves in the foot, because with a net trade surplus of $200billion visavis America, they need the American market as much, if not more, than America needs those rare earth elements.

The major way they manipulated their currency was by buying American T-Bonds (they hold $750billion according to
this site) from the proceeds of their exports to America, which had the effect of lifting the US Dollar vs the Yuan.

That policy is now coming home to roost. They can’t dump their holdings, and every time they revalue the yuan (it’s at about 6.65 vs 6.83 a few months ago), they take a haircut on their foreign reserves. Tough, they should have known that nobody can buck the market.

I well remember in the eighties, when everybody thought that Japan would become the leading economy, an article in the Economist that said if American companies in Japan re-patriated back to the States, Japan would not have had the trade surplus they had with the US. My guess is that the exact same thing applies to China now. So they’ll be shooting off both feet if they continue to play hardball.

Better to suck it up, carry on raising the standard of life for their citizens, and stop with the pissing contest, because although everybody will lose, they’ll lose more.

Some of the above posters should read a little. The biggest. reason this is an issue is due to Environmental regulations imposed. Such as "sufficient data to complete a NI 43-101 compliant resource estimate, suitable for a Preliminary Assessment Report and move toward a feasibility study. It is expected that if this project continues to move forward, then the feasibility study will require three phases of drilling, permitting, and extensive metallurgical testing, over a period of 2-4 years."
Blah blah………………………..

Hopefully, this move by the Chinese will stick. Then the Obama admin. will be stuck between a rock and a hard place. Should they build wind turbines and Prius, or continue to deny mining permits. I say they would push the mining forward and then we'll have our own resource.

In Utah:
As an example, the Upper Bench , which averages approximately two miles wide by ten miles long (within the Property)—includes an area of approximately 12,800 acres (20 Sections each 640 acres)—this area alone, taken to an average depth of 100 feet, could contain in the order of 223,000,000 tons of material per Section, or a gross of about 4.5 billion tons of material. If we include the Middle and Lower Benches, which appear to be 150 feet thick, and possibly equally as extensive, the potential resource could reach 15 billion tons (15BT)." with 0.80% Trace Rare Earth Oxides.

It’s not as if this stuff can’t be mined elsewhere or recycled. It’s just that no-one has been interested because supplies from China have been plentiful and therefore cheap. I can’t believe the Chinese will be dumb enough to throw their weight around too much. If they do, and it looks as if the supply will become irregular or expensive for an extended period, people will find new sources. There’s no evidence that China is the only place these minerals can be found…

The world is full of rare earth elements. Alternative supplies will eventually be secured.

In the interim ,the traveling AGW soap opera will be portrayed in the context it justly deserves. That being to peddle the environmental AGW lifestyle choice in the guise of dogmatism pertinent to ‘natural law and universal truth’

Greenie hubris justifies the use of fear and emotional blackmail to coerce the stupid selfish environmentally disinterested to adopt the true religion.

The uncaring Chinese go and spoil the ‘environmental’ fairy tale. The Chinese lifestyle choice is to ensure the Chicom ruling party remains in power by keeping the masses preoccupied with the party dictated multi year plan and decreed lifestyle choice of “industrialize and consume”.

The Chinese citizen doesn’t wish to make the ‘environment’ their lifestyle choice. They prefer to follow their leaders and enjoy the good rewarding life of assured employment and reward for work done.

This is probably just the beginning. Mining is moving out of the US because of perceived environmental nightmares. Much of our uranium can’t be touched in northern Arizona because of a 2 year study on the dangers)???). The Grand Canyon has a lot of uranium, low grades from the shale and high grade from the outcropping breccia pipes. But that is natural(?) uranium, I guess the stuff 20 miles from the canyon is perhaps not natural so we can’t mine it.

Agree with many previous comments. Environmental lobbyists and legislation have stiffled mining of the not so rare earth minerals. At least one benefit in the short term is that windmill construction will be delayed and be even more uneconomic.
How will the eco-fascists organise their protests without mobile phones?

While that is true, they don’t control 97% of rare earth deposits. It is just cheaper right now to pay someone in China to mine and process them than it is to pay someone in the US or anywhere else to do it so yes, they have the most “production” currently. If China continues to disrupt supplies, other sources of supply will ramp up as it becomes economical to do that.

Firstly @ Richard Sharpe October 21, 2010 at 2:00 pm,
With regard to the military spat ‘twixt China and Viet Nam in1979 … The biggest problem which the Chinese faced was the bottlenecks imposed by their own infrastructure as they were trying to cycle as many new and ‘unbloodied’ units through the “war” as they possibly could. Not one principal front-line unit participated in this campaign on the Chinese side. Much work has since been undertaken to ensure that armoured regiments can be moved swiftly to any part of the Chinese mainland.

As for the rare earth embargo, all I can say is “Hahahahahahah!!!” All those greenies crying for less dependence on foreign oil, urging everyone to buy a Prius to “Save the Planet” now know that they remain in the thrall of a power not known for being a friend of the USA. If all of the ludicrous rules and regulations pertaining to mining were relaxed the US could be self-sufficient in these rare earth minerals in two years or less.
When are the scales going to be cast from their eyes?

The eco wackos are scared to death when a hole is deeper than 6 feet for a standard grave. North America has the metals. We don’t have active mines. Most months of the year, some japanese companies find a bone fragment in a beef shipment and create an embargo. We need to exercise our rights to embargos. If we find lead in the coating in toys, embargo toys for about 14 months.

It would be far easier to fire up mines and mills than it would be to fire up political willpower to get the ball rolling.
We have been painted into a corner by external lobbying that favored handcuffing capitalism for a pawn shop payday.

Most of the world’s REE production used to come from Mountain Pass, off I-15 between Los Angeles and Los Vegas. That mine was closed largely because it spilled thorium contaminated water into a dry lake bed and had issues with leaking pipes. It’s set to reopen soon but had to go through 18 environmental agencies and will have to spend $2.4 million a year in monitoring.

I had an interesting chat in the early 80’s with an exiled fish-farming expert from the former Rhodesia. He was employed by the Snowy Mountains trout company for which I was working casually.

The gentleman – he truly was a gentleman – told me of how Rhodesia dealt with the problems of total economic isolation from the boycotting West. They remained quite prosperous by refusing to waste or overlook any possible resource. Everything was limited and everything was “peak”…

So those bright and resourceful creatures called humans simply adapted! And there’s a pretty good chance that we’ve been doing mostly that throughout our long development as a species.

paulhan says:
October 21, 2010 at 2:05 pm
“The major way they manipulated their currency was by buying American T-Bonds (they hold $750billion according to
this site) from the proceeds of their exports to America, which had the effect of lifting the US Dollar vs the Yuan.

That policy is now coming home to roost. They can’t dump their holdings, and every time they revalue the yuan (it’s at about 6.65 vs 6.83 a few months ago), they take a haircut on their foreign reserves. Tough, they should have known that nobody can buck the market.”

You really do not wnat to contemplate what would happen to the US economy (and the rest of the G20 economies) if China dumped all their US Treasury holdings. I wouldn’t be just a “double-dip” recession we’ld be worrying about!

The USA can’t mine and we can’t drill but the crazy environmental kooks want us to be dependence free of foreign nations. We can’t have it both ways. If we want to be truly free we have to get our hands dirty.

You need some history lessons on Vietnam and not the liberal dogma , and as for China physical size is not the only thing that matters but they are becoming a concern and this is one example of them starting to flex their muscles.

Rare earth mining has enviro issues and this is one example where big green chased mining to other parts of the world, out of sight, out of mind while playing with their ipods.

paulhan says:
October 21, 2010 at 2:05 pm
“The major way they manipulated their currency was by buying American T-Bonds (they hold $750billion according to
this site) from the proceeds of their exports to America, which had the effect of lifting the US Dollar vs the Yuan.

That policy is now coming home to roost. They can’t dump their holdings, and every time they revalue the yuan (it’s at about 6.65 vs 6.83 a few months ago), they take a haircut on their foreign reserves. Tough, they should have known that nobody can buck the market.”

You really do not wnat to contemplate what would happen to the US economy (and the rest of the G20 economies) if China dumped all their US Treasury holdings. I wouldn’t be just a “double-dip” recession we’ld be worrying about!

Steve Crook says:
October 21, 2010 at 2:08 pm
“I can’t believe the Chinese will be dumb enough to throw their weight around too much. If they do, and it looks as if the supply will become irregular or expensive for an extended period, people will find new sources. There’s no evidence that China is the only place these minerals can be found…”

You have to look at this from the point of view of the Chinese “leadership.”

They gain kudos by beating up on the “west” and particularly USA. They get to control what Chinese people read. (I originally wrote “citizens” but that dosn’t seem right). THEY DO NOT HAVE TO BE RE-ELECTED by any system that we in the west regard as “democratic.” They “the leadership” ONLY wish to maintain the staus quo in China. If that is not maintained what happens in China? They dare NOT face that prospect!

paulhan says:
October 21, 2010 at 2:05 pm
“The major way they manipulated their currency was by buying American T-Bonds (they hold $750billion according to
this site) from the proceeds of their exports to America, which had the effect of lifting the US Dollar vs the Yuan.

That policy is now coming home to roost. They can’t dump their holdings, and every time they revalue the yuan (it’s at about 6.65 vs 6.83 a few months ago), they take a haircut on their foreign reserves. Tough, they should have known that nobody can buck the market.”

You really do not wnat to contemplate what would happen to the US economy (and the rest of the G20 economies) if China dumped all their US Treasury holdings. I wouldn’t be just a “double-dip” recession we’ld be worrying about!

Yes, it would be a Pyrrhic victory, wouldn’t it.

“Victory?” An interesting choice of word in the circumstances! “Pyrrhic” it would certainly be.

Firstly @ Richard Sharpe October 21, 2010 at 2:00 pm,
With regard to the military spat ‘twixt China and Viet Nam in1979 … The biggest problem which the Chinese faced was the bottlenecks imposed by their own infrastructure as they were trying to cycle as many new and ‘unbloodied’ units through the “war” as they possibly could. Not one principal front-line unit participated in this campaign on the Chinese side. Much work has since been undertaken to ensure that armoured regiments can be moved swiftly to any part of the Chinese mainland.

As for the rare earth embargo, all I can say is “Hahahahahahah!!!” All those greenies crying for less dependence on foreign oil, urging everyone to buy a Prius to “Save the Planet” now know that they remain in the thrall of a power not known for being a friend of the USA. If all of the ludicrous rules and regulations pertaining to mining were relaxed the US could be self-sufficient in these rare earth minerals in two years or less.
When are the scales going to be cast from their eyes?
=======================================================

I can’t help but think the anti-Americans in America, at least many of them, were fully aware this would happen. They no more want a self-sufficient America than I want a windmill with a “Made in China” sticker in my back yard.

Much more to say, but off to shoot some pool! To echo B. O’Reilly, if I offended……..ahh screw that. Oddly enough, today I prefer to echo J. Williams, “I said what I meant.”

If China sells REEs to anybody, then everybody will have access to them through resale. If not, production will ramp up outside China. Prices will go up, then down. Civilization will not collapse any more than it did during the Arab oil “embargoes”.

By time this came to the media’s attention, the US/Chinese stooges would of had some frank and free conversations, arrived at
something like a working solution, and moved on to fabricating the next fake emergency.

China is gobbling up nearly every resource it can buy, borrow or steal….a lot like the European Empires did, and PAX AMERICA
has.

Same crooks, playing at Nationhood, in practice just hoods.

This looks like a publicity stunt to me, one more reason for the US govenment to “dislike intensely the Chinese position (we’re still eager to meet though, man i’m addicted to their Dim Sum)”, and at the same time carve up whats left behind the scenes.

Since China’s Politicians are as crooked as the US, i’d say they’ve already made lucrative deals that screw both nations Tax payers over.

Well the USA has a history of letting its holier than thou attitude get in the way of global reality.

Not so long ago, many US companies declared that they would not do business with nor invest in the Republic of South Africa; because of its Apart-hate race policies.

Well in that case, there were only 43 strategic minerals for which the RSA was the primary US source. Well there were secondary sources for some; the second in line was an outfit called the USSR.

So which of those two would we say was the #1 bad guy on the planet at that time. We had the absurd situation of The Soviet Union being our main source for Titanium with which to build our State of the art aircraft like the SR-71.

But all sorts of do-gooders cut off commerce with RSA. Guess how beneficial that was to the economic interests of the Black people of South Africa.

Nobody on this planet; holds apart-hate in greater contempt than I do; but we didn’t help black Africans or ourselves by cutting industrial ties with that country.

But people having been warning of the China RE Syndrome for years; and the dumb***** in Washington have been too busy getting themselves re-elected to the gravy train; than paying attention to “…providing for the common defense and general welfare of the United States……….”

And the corporate dummies haven’t gotten any smarter either.

California’s leftist greenie legislature with the blessing of our “girlie man” RINO Governator enacted AB-32; a carbon Tax and Spend Bill to fund their socialist largesse; which is slated to go into effecvt in 2012; and which has started a massive exodus of business from California to more enlightened States.

So the People proposed Proposition 23 to be voted on this coming election; to put AB-32 on hold until the unemployment rate in the State; which is now over 12%, comes down to something like 5.6% which is about the State norm (baseline). Some wanted to simply repeal AB-32 which is completely anti-business; but they settle for just a delay till the unemployment crisis is past.

So guess who is working to defeat Prop 23, and implement AB-32.

Why Bill Gates; bless his little heart, has put up some $700,000 to help defeat the measure, and not to be outdone, Gordon Moore of Moore’s Law has put up $1meg.

Now Prop 23 happens to be supported by a couple of Texas oil companies that do business in California. Oh the horror of it; BIG OIL interfering in California’s internal affairs. Well yes they interfere in CA affairs; since they supply Californians with much of our oil needs, since producers are not allowed to expand their operations in California; so we can’t use our own oil or gas, and have to import much of it from Texas.

But why would some big fat cat “entrepeneurs” want to see AB-32 go into effect; and impose its punitive carbon taxes on Californians, and California Businesses ?

Well lookie here; look at all those welfare parasite silicon valley solar companies who plan to make themselves a fortune with their taxpayer subsidized, but uneconomical solar power free clean green renewable energy projects.

Now there are a couple of Si valley solar cell producers that I believe will do well, and have good efficient technologies; that should succeed in some measure; but most of them are nut jobs that don’t seem to understand that solar energy comes in at about 1 kW per square metre, and you only will get a small percentage of that onto the grid.

But those carbon tax swillers at the public trough will feather their nests with the fruits of their opposition to prop 23.

So the exodus will continue; and accelerate. I have a Niece and her very talented movie script writer, who currently live in LA are pulling up stakes and moving to a “better environment” in which to bring up their family. They won’t be the last; nor will I.

I don’t understand why this is supposed to hurt the U.S…. outside of research institutions that use rare-earths for research, we don’t have any electronics foundry’s left in the U.S., those were all outsourced to Asia long ago.

We simply don’t produce anything, so why would halting imports of rare-earths from China matter to us?

The Chinese Experiment continues. Maintain a strong government that is arguably run as a meritocracy with swift removal of incompetents. Pursue economic and social policies that keep the peasants cared for thus quiet and under control, with the use of governmental might when the peasants are unruly for what the leadership considers no valid reason. Being rational, they have accepted that the influences of the Outside World are disruptive to their control, therefore they have rationally decided the solution is to eliminate the Outside World. Using the subtler and slower might of economics, they are gathering other nations into their sphere of influence by acquiring financial obligations of developed countries and providing aid to poorer ones, garnering political favoritism and concessions. Once they have achieved unquestionable financial dominance with unbreakable crucial political agreements, they can begin assuming direct governmental control culminating in the non-existence of any Outside World.

And now they are flexing their governmental might. Those who will be serving them are being unruly, insolent. The return of the Eternal Chinese Empire is inevitable, it is foolish for their soon-to-be-servants to oppose their soon-to-be rulers. Thus the ruling class acts to remind the peasants who is really in charge, as they are accustomed to do.

In a recent ‘spat’ over water and fishing rights, China put an embargo on sales of “rare earth” elements to Japan. These have economic and strategic importance in that they are widely used in electric motors, high performance magnets, and a variety of electronics. Since China is presently the source of over 90% of the rare earths, this was a significant boot to the neck of Japan.

So, many folks have leapt to the conclusion that China has some special lock on the global distribution of rare earth minerals. Are we in fact slave to China having the natural abundance and the rest of us impoverished?

“industry experts say that relaunching an independent U.S. supply chain could take 15 years”

Are these guys crazy? Building the first nuclear bomb has taken less than three years, starting from scratch (plutonium was unknown until February 26, 1941). It was a pretty large scale operation, at one point Oak Ridge uranium enrichment plants alone were consuming 1/6th of the electrical power produced in the entire U.S. Still, an experimental fission reactor, Chicago Pile-1 went critical on December 2, 1942 while the gadget was detonated near Alamogordo on July 16, 1945. And it was a government project.

Fifteen years, of course. Having fallen victim to such a defeatist mentality, the US would never win a war again.

paulhan says:
October 21, 2010 at 2:05 pm
“The major way they manipulated their currency was by buying American T-Bonds (they hold $750billion according to
this site) from the proceeds of their exports to America, which had the effect of lifting the US Dollar vs the Yuan.

You really do not wnat to contemplate what would happen to the US economy (and the rest of the G20 economies) if China dumped all their US Treasury holdings. I wouldn’t be just a “double-dip” recession we’ld be worrying about!

Don’t spoil all the fun.

One day the West to wake up and realize that it has turned itself into a human resource gutted, bankrupt service economy that bolsters the profits of multinationals and subsidizes developing economies by off-shoring labor costs (I.E. The exporting of “income creation”).

The Chinese have for a number of years been somewhat less than impressed with certain US officials publicly lecturing China on how it should run its economy.
A comparison of the two economies over the last 20 years might suggest who should have been lecturing and who should have been listening.
Which government beuacracy makes it easier for its people to compete in the world market? Which one makes it harder?

And on the point of China not being a friend of the US. Has the US been a friend to China?
The greatest threats to the affluence and lifestyle of American people do not reside outside of the US (and how many of them do you think do not rely on a government paycheck?).

The embargo rhetoric is a bit overblown, China does produce nearly all the rare earths, but as there internal demand has rapidly increased they are also close to using all of them internally – pretty hard to criticise them for prioritising their own industries over those in other countries.

And as many have mentioned it is only a matter of a year + political will to turn on production elsewhere. There was a massive find in Greenland last year now being developed.

China is not anyone’s friend – they’re totally amoral, believing only in power and it’s use in all forms. Their global bullying will intensify massively over the next decade (move over America, they believe in manifest destiny and ruling the world more than you ever did). But apart from raising awareness restricting supply of Rare Earth’s doesn’t rate as even a skirmish in the context of the coming Dragon Age.

We can’t do much about this. However, we should stop recycling our recyclable waste because much of it ends up in China where they use it to build things to sell to us. If they get less recycled goods, their products that use them will cost us more meaning we’ll by less of them and maybe save some American jobs.

We should especially stop recycling our electronics goods. Better to keep them here since we can extract some of these needed materials from them.

I lay this all at the feet of unfettered capitalism (the utopian dream if the Tea Party). Companies in our intense capitalist system can owe no allegiance to any country – only to profit if they want to survive. Driven by stockholders expecting immediate profits, they seem always to seek always short-term gain.

When the vast Chinese labor market opened up, our American (and European) companies could not wait to build manufacturing plants in an ultra low-cost labor arena. They used profits gained in America to build shiny new high-tech manufacturing plants in China, killing many American jobs. The Chinese had only to accept this largess from the great capitalist giants and put their people to work. China was modernized overnight. China is now flexing its new-found muscles.

paulhan says:
October 21, 2010 at 2:05 pm
“The major way they manipulated their currency was by buying American T-Bonds (they hold $750billion according to
this site) from the proceeds of their exports to America, which had the effect of lifting the US Dollar vs the Yuan.

You really do not wnat to contemplate what would happen to the US economy (and the rest of the G20 economies) if China dumped all their US Treasury holdings. I wouldn’t be just a “double-dip” recession we’ld be worrying about!

Don’t spoil all the fun.

One day the West to wake up and realize that it has turned itself into a human resource gutted, bankrupt service economy that bolsters the profits of multinationals and subsidizes developing economies by off-shoring labor costs (I.E. The exporting of “income creation”).

Ravings, you don’t have to be so blunt nor cryptic. While there are boundaries here, there aren’t many if you simply articulate your meaning. I’ve read your posts, some I agree with, others, perhaps may require clarification. Slow down. Many here may be sympathetic towards your assertions.

I lay this all at the feet of unfettered capitalism (the utopian dream if the Tea Party)…..blather…blather…blah, blah.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Really? Did you not notice the several billion dollars the socialists took from yours, mine, and any other capitalist a$$ to facilitate such nonsense? We called it a stimulus package! Your unfettered socialist being feeling stimulated yet? If you want to check a bit of reality, the Tea party was against this insanity. But feel free to live in your alternate reality if you will, it must feel better to live there.

Hey! I’ve got a great idea! Let’s spend capital we don’t have to pursue a technology that makes us dependent upon a communist nation! What? You ask where will we get the money? We’ll just pass laws that takes it from the workers in this country! Then, our HOPE will transform into CHANGE! Lunatics running the asylum.

Well this is interesting. To be honest nobody has shot themselves in the foot. Look at the growth curve for China. They will need all they can mine plus some more. Just like with oil. Remember that one? China was an EXPORTER of oil not so long ago (or maybe I’m just so old I remember that :)

So now they will keep their REE mined from their enviro-freaking-disaster mines to use internally. The rest of the world will have to adapt and pay more $$$ regardless of the source (China or alternate).

So China says “we’re keeping more” which will drive the price up and they will make the same amount from their export making their domestic supply essentially free (not to the end users of course!).

The real battle will be the bidding war for the REE from places that can get their mines online the quickest. China will be there, count on it!

The USA gives a trillion to a bunch of banksters who should be locked up for epic fraud and China spent 600 billion on infrastructure. Hmmm I wonder who got the best of that deal? Don’t underestimate your opponent. Keep your supply lines protected and all that great Art of War stuff.

You’d have more credibility if you had been fulminating with good old tea party rage when our previous president was using stimulus packages like mad (I remember the checks he sent us so we could spend more), waging an expensive, elective war without paying for it (and not even including it in the budget). Where were you and the rest of your comrades then? Did you call our previous president a socialist, fascist-leaning communist?

Whoooeee is James Sexton getting excited or what. And he had the nerve to counsel Raving on his ranting. That was a hoot. Actually I enjoy reading both James Sexton and Raving so dont you guys take this as a discouraging word. I love it blunt and cryptic, Im rolling here cant get up for laughing.

Sis, don’t think I wasn’t “fulminating”. It was wrong headed then, it has taken to an extreme failure now. An”expensive, elective war”? RU serious? You’ve checked the expenditures of both wars compared to the last 2 years? Here’s something to ask. If the check scheme failed, why, why on God’s green earth would we exponentially increase the failure? Why, also, would anyone decide to send the money overseas? How in the fck would anyone consider this beneficial to the U.S.? You want to bash GW for cutting checks? That’s fine and deserved! Does that excuse exponentially raising the lunacy and sending the money elsewhere?

And, just to be clear, I wasn’t limiting my insinuations only to our president. The fact is, I think he had no clue about where the necessary materials came from. I’m quite certain of this. This would be why he doesn’t release his scholastic history.

But, what else I’m certain of, is that it was stated plainly and clearly the rare earth materials would and did come from China. Even on this website it is referenced many times. Go to CNet. It is referenced there many times. It was plainly known to anyone that cared to know. Foreign dependence my A$$. This was entirely purposeful, playing on the buffoonery of dolts.

And you’re going to bring up a $500 check cut to tax payers? I’d say, regardless of how they spent it, it was better spent then. Or, maybe you prefer dependence upon a communist country as opposed to a capitalist one?

Here’s an idea. Why don’t we open our mines and extract our own materials and drill our own oil? Yeh, real radical idea, I know.

Why don’t we make it a law that any steel milled for a windmill must be done by a U.S. steel company? Or an oil rig? Or a gas well? Any rare earth material for solar panel must be from the U.S.? Is it more acceptable for the environmentalist that it comes from China? Or Saudi? Do they believe China and Saudi Arabia or Venezuela regard the environment more than the U.S.? Is this the position of the alarmists?

I am a citizen of a country that is neither USA nor China.
My country both exports and imports a substantial part of our economic activity.
We are part of the world community.
We are inevitably co-dependent with the rest of the world.

The USA and China are both huge and powerful.
However you too are not, and can never be independent, if you do not wish to live in poverty.
If you doubt that, ask yourself how many jobs would there be if foreigners did not buy your goods or loan money to you to keep your banks from bankruptcy?

Ausie, I was going to respond to johnmcguire, however, yours is a more meaningful statement. I know many will take my response in a manner not meant. But, I think it should be said.

Poverty is defined in many ways. I define prosperity as having the general ability to provide the basic necessities for ones family and the ability to gain more if one desires. In today’s modern society, that includes housing, food, clothing, heating, cooling, and communication. If a nation was to generally be able to provide these necessities to the populous, then it would be difficult to state they were in a state of poverty.

You said, “The USA and China are both huge and powerful. However you too are not, and can never be independent, if you do not wish to live in poverty.”

You are partially correct. Both the USA and China are both huge and powerful. I submit, though, the U.S. can be(though not unique to the U.S.) independent. There is no resource, necessary to the above mentioned, in which the U.S. cannot provide for themselves. In fact, the U.S. (and other nations) would be more prosperous if they chose to do for themselves what they are having others do for them. More, if we were to engage in such matters, we would find an abundance in which others would find necessities.

I smell a well planned ruse. How amazingly easy it is for the propaganda mills to incite so many to a near war footing at the drop of a hat. (Grab your saber — someone has shot the archduke. )The biggies in all countries must continually pat themselves on the back for their ability to enrich themselves by wars where literally millions might die — except none of them. Wink. Wink. Nod. Nod.

Rare earths have no preference for China. They are not concentrated in extreme amounts like tin, silver, iron, nickel, etc. They are fairly evenly distributed. In fact it is likely that America could revive its industry and lead the world in a couple years simply reprocessing tailing from tin (which America has preciously few) mines, gold , lead , and zinc mines. Rare earths require effort, not extreme concentrations which would be so unusual as to be a scientific curiosity. But environmental laws no longer allow it. It is another business sent to China. Like light bulbs.

I just thank God every day for the complete and total economic collapse of the US that is now a mathematical certainty.
China and the rest of the world should cut dead beat America off from all trade with them.
It will be nice when we can make bicycles, toasters, microwaves, printers, TVs, and all the other consumer stuff we want to buy, right here in the USA again.

“Why don’t we make it a law that any steel milled for a windmill must be done by a U.S. steel company? Or an oil rig? Or a gas well? Any rare earth material for solar panel must be from the U.S.?”

Because we would lose by causing wasteful capital investment in the US, and by losing a low cost source of raw materials when China removed its restrictions (as it inevitably would). China would lose the US as a customer for these materials. Much better to determine with the Chinese exactly what the problem is and plan a solution, possibly involving US capacity. Hopefully it will become apparent that a continuing embargo is a lose – lose proposition. Only when the situation proves intractable for some reason should trade restrictions be reluctantly considered. It would feel good to produce all of our own oil and not buy from the Middle East, but would it really be the best thing to do?

“….How amazingly easy it is for the propaganda mills to incite so many to a near war footing at the drop of a hat. (Grab your saber — someone has shot the archduke. )…..”
=======================================================

No one is even close to that extreme, nor would any rational person propose such insanity. Has there been some manipulation? Sure, it seems fairly plain that there has been, or at the very least, political expedience in lieu of national good.(for many nations) It is for the various people to root out the Quislings from being decision makers, held up for ridicule and scorn and proceed.

“Why don’t we make it a law that any steel milled for a windmill must be done by a U.S. steel company? Or an oil rig? Or a gas well? Any rare earth material for solar panel must be from the U.S.?”

Because we would lose by causing wasteful capital investment in the US, and by losing a low cost source of raw materials when China removed its restrictions (as it inevitably would). China would lose the US as a customer for these materials. Much better to determine with the Chinese exactly what the problem is and plan a solution, possibly involving US capacity. Hopefully it will become apparent that a continuing embargo is a lose – lose proposition. Only when the situation proves intractable for some reason should trade restrictions be reluctantly considered. It would feel good to produce all of our own oil and not buy from the Middle East, but would it really be the best thing to do?
++++++++++++++++++++++++++++++++++++++++++++++++++++++

I suppose it depends on ones perspective. You are entirely correct when you state, “…losing a low cost source of raw materials when China removed its restrictions…”.

However, as we’ve witnessed today, when we do such business ventures, we become beholding to this nation’s(China) policies. Further, at what point would you decide that it becomes too costly to buy from this nation? Are there guarantees in which we should bank on from them? Do you remember when certain Latin American nations nationalized their oil? The same happened to other nations.

I ask you, was it better for the U.S. that we invested, developed and operated the oil wells only to have it taken from us? Would the money have been better spent developing better and more efficient ways to extract our own resources? Be it oil, coal, gas, wind, solar…etc… How much further could we have been?

Because we would lose by causing wasteful capital investment in the US, and by losing a low cost source of raw materials when China removed its restrictions (as it inevitably would).
=======================================================

You do realize you are describing what benefits individuals, not tied to a society, as opposed to benefiting a nation from which the “capital” came from? In other words, you are describing the export of capital! Yes, that helps the person(s) that engages in such actions. But, only them. Thanks.

Nigeria has REE’s but these are dug from hand excavated scrapes in the ground so quantity is a problem. I am sure that there are areas of US and Canada where REE’s can be found. Come on you geologists get your hammers and start searching. Australia also has REE’s so ask them in the mean time.

Never mind rare-earths, if China stopped shipping goods the UK would be without any products whatsoever, especially electricals.

At present we make … umm … and some … umm … and a little …. umm ….
Ah, I know. We make coloured pieces of paper with the Queen’s head on them, and give them to China in return for everything we consume.
.

I love the license plate photo! A US trader speaking on condition of anonymity for fear the Chinese might cut him off from rare earth metals saying the Chinese have cut him off from rare earth metals isn’t exactly a confirmation or even a reliable source, if you see what I mean.

Another thing to consider: Greenland, where George Soros allegedly believes global warming will uncover significant rare earth deposits now locked into the ice (rather than locked into bedrock, which is so much easier to cut through than ice).

Please, people, don’t be so gullible. This is supposed to be a sceptical blog! There is no evidence that China has imposed any sort of blockade on the US, and they flatly deny having done so. All we have is an anonymous claim from alleged industry “officials” with an axe to grind. Such a blockade is most unlikely to have occurred, because it would be contrary to China’s interests, and Chinese politicians are not as idiotic as American ones. It is however quite likely that the export price has risen and the export quantity fallen as Chinese domestic demand has increased; this would be normal market economics. US “retaliation” against China would be very bad news for the US government, because if China can’t sell to the US it won’t have the dollars to lend them back.

“Raving says:
October 21, 2010 at 1:25 pm
Lol. The Yanks get screwed by way of their own self serving free enterprise dogmatism.”

You really have a flawed understanding of free enterprise and why we’re reliant on China for these materials.

“RockyRoad says:
October 21, 2010 at 1:58 pm
Good luck producing any REE from future mines here in the US–I quit the mining business largely because of the difficulty in getting signoff from the vast number of competing jurisdictions–often complying with one put you out of compliance with another. It will probably take a literal Act of Congress to get sufficient supply of these minerals here domestically.”

That whole ‘act of congress’ thing’s going to get a lot easier in about 12 days.

Please, people, don’t be so gullible. This is supposed to be a sceptical blog! There is no evidence that China has imposed any sort of blockade on the US, and they flatly deny having done so.
========================================================

Whether the have or haven’t isn’t really the issue. The alarmists have put the U.S.(and many other nations) in a position quite similar to U.S.’ position with OPEC. All in the name of a Quixotic venture they were told wouldn’t work to begin with. Our politicians are culpable. The question isn’t whether China did or didn’t do anything, the question is why have people intentionally put us an a position to care?

I was surprised by the number of Gung Ho posts on this thread.
Usually, in trade wars there are only losers.
I am not a political animal and I have the utmost distain and contempt for politicians and their ilk. I know that this is not a desirable characteristic, but I just can’t help it when you see that politicians have no real regard for orinary people and are unaffected by their own policies (which usually shaft ordinary people) and appear in the game simply for what they can get out of it. Politicians have far less power than they think that they have, and in general are only capable of changing things for the worse, not for the better.
Leaving my gripes aside, I consider that it would be prudent to lead China (nudge her in the right direction) not confront China. All of this reminds me of the observation by Napoleon Bonapart:
“There lies China sleeping, let her lie for when she awakes the world will tremble”

James Sexton says:
October 22, 2010 at 4:55 am
“Whether the [Chinese] have or haven’t isn’t really the issue.”

Surely crying wolf is an issue here? There is no crisis, and no likelihood of one unless the politicians get stirred up into doing something even stupider than usual.

“The alarmists have put the U.S.(and many other nations) in a position quite similar to U.S.’ position with OPEC. All in the name of a Quixotic venture they were told wouldn’t work to begin with.”

Not really. It takes a continuous flow of oil to keep the home fires burning (so to speak). Even a temporary embargo would hurt quite a bit. But the cessation of imports of products containing rare earths would have essentially no immediate impact. The windmills would keep turning, the hybrids would keep running, consumer electronics would keep functioning. The construction of new windmills and the sale of new hybrids might stall, but that could only be a problem (if at all) over the long term (though, in fact, it would probably be beneficial, since less capital would be wastefully invested).

“The question isn’t whether China did or didn’t do anything, the question is why have people intentionally put us an a position to care?”

Because buying from China is cheaper, and paradoxically more secure than relying upon domestic supplies (given the political realities). China won’t stop selling, because that would be tantamount to committing suicide, and, unlike some of OPEC, they are no longer ideologically driven. They may still be notionally communist, but in practical terms they are now less communist than Obama or Cameron. That said, I do think that selling off strategic reserves is foolish; every country should keep emergency supplies in case of war.

“Surely crying wolf is an issue here? There is no crisis, and no likelihood of one unless the politicians get stirred up into doing something even stupider than usual. ”

I’m not at all certain that anyone’s crying wolf. First, yes, there is no “embargo”, but what the Chinese did was cut export quotas of REE to the ROW (rest of world).
You can read about that in many places, here’s one from down under:http://www.theaureport.com/pub/na/6821

And it makes perfect sense at this time for China to do this. It virtually ensures continued success for their manufacturing base, especially in the area of windmills, batteries, and EVs, all of which are in relatively high demand right now due to the ridiculous energy policies put in place by much of the industrialized nations.

Want to buy a hybrid/electric vehicle? Sure…no problem, as long as you buy a Chinese car that was manufactured in China, using China’s resources and labor.
And if I were an economic advisor in China?…I’d be advising exactly the same thing, and laughing all the way to the bank…and then I’d continue to lend the money I made BACK to the U.S., cuz it’s such a great investment!
Sounding sort of like the “company store” scenario? ;)
“16 tons, and what do you get?”

Our economic relationship with other nations has muted warlike tendencies on all sides. That is why we spend so much time worrying about trifling variations in climate, which is the new outlet for our aggressive tendencies.

JimB says:
October 22, 2010 at 7:15 am
“I’m not at all certain that anyone’s crying wolf. ”

Then you haven’t been reading this thread!

“First, yes, there is no “embargo”, but what the Chinese did was cut export quotas of REE to the ROW (rest of world).”

Yes, but so what? That’s the natural consequence of the growth of their own manufacturing industries. Which in turn is a natural consequence of the fact that they’re producing those goods more cheaply than anyone else is doing. Which in turn is a natural consequence of the fact that they’ve invested the capital to produce them more cheaply. Which in turn is a natural consequence of the fact that China is now a less communist country than the US. That’s not a crisis; it’s the market doing what it’s supposed to do.

“And if I were an economic advisor in China?…I’d be advising exactly the same thing, and laughing all the way to the bank…and then I’d continue to lend the money I made BACK to the U.S., cuz it’s such a great investment!”

It’s not a great investment. It’s a trap the Chinese are caught in, because the US produces relatively little that they actually want, yet they have to do something with all those dollars. In the longer term they should be looking to a less export lead economy, in which their own domestic demand is dominant and they can afford to let the US crash; but at the moment, they can’t.

Didn’t we (the USofA) do the very same kind of thing to a country or two back in the 1930’s? What goes around sure does seem to come around, don’t it? Now how was that resolved way back then? I can’t remember, anyone have a clue?

It’s worth while clicking through the LiveScience link to the original NYTs story, and there are many comments there, some quite insightful.

A point made here and by NYTs commentators is that restrictions on supply by China will lead to greater production in the US and elsewhere, sort of an Econ 101 conclusion.

That may be true if China’s economic advantage is relatively small. However if they have a large advantage in production costs they are in a similar situation to us as OPEC: As a low-cost monopoly supplier they can, as entrepreneurs attempt to develop highly capital-intensive new supplies, with long time to production projects, drop prices back until new competitors are forced out of capital markets or bankrupt.

Then China, like OPEC, is in a position to restrict supplies or raise prices again.

There are tariff, subsidy, and trade policies that could be adapted to deal with strategic economic enemies like China and OPEC, but that would require at least partial abrogation or renegotiation of trade agreements and US political leaders who were willing to take a long view and resist corporate importer and green interests.

Don’t confuse rare earth elements with rarely found elements. RREs are pretty much everywhere. It’s a matter of who can mine and refine it the cheapest and that in turn is dependent on how willing you are to exploit the labor force and pollute the environment around the mines. China doesn’t lead the world in exploiting its labor force and disregard for polluting the environment but it has far less of those concerns than the United States.

This is not a strategic concern. California between 1960 and 1980 was the world’s largest producer of RREs and it was only shut down when China flooded the market with lower cost RREs. California mines can be back in production within a year if there’s any strategic need for them and there are undoubtedly many other sources in the contenental US and Alaska if anyone were to bother looking for them.

China is very limited in what damage it can intentionally or even unintentionally inflict on the United States lest the US choose to default on dollar denominated debt or inflate its currency until the debt service is essentially worthless (which China fears will happen anyway with continuance of US government printing Obamabucks like there’s no tomorrow). It’s an economic Mexican stand-off.

This why what’s called dumping or predatory pricing is proscribed by international law and enforced through the World Trade Organization even though it runs counter to fundamentalist free trade. It’s often a precurser to the formation of monopolies which are also proscribed in direct contravention to fundmentalist free trade. Capitalism and free trade are not things that work well without some constraints to keep things like dumping and monopoly formation to a minimum.

Dumping is essentially defined as the selling of any product below its cost of production in order to force other sellers out of the market. With China and the US it becomes difficult to demonstrate in many cases. The production cost of RREs in the US is constrained by things like minimum wage, OSHA regulatory burdens, EPA regulatory burdens, and so forth. China’s cost of production would be essentially the same as US cost of production if China imposed the same regulatory burdens. Personally I believe in import tariffs designed to level the regulatory burdens and would force China to either exit the market or stop exploiting its labor force and polluting the environment in order to keep a share of the US market for those goods. That applies to a great many countries which have large markets in the US. Unfortunately there are far too many others with NIMBY (not in my back yard) syndrome happy to have access to inexpensive goods so long as the labor and environments exploited to reduce the price are not United States citizens or territory. Thus the United States was happy enough to let the RRE operations in California be forced to shut down while the supply was replaced by much cheaper imported RREs from China.

War has been historically the political answer for a failed political system.

In Korea, we (Americans) lost about 35,000 KIA. China lost well over 1,000,000 KIA.

China could easily afford to lose 10 million KIA, as they have an excess population and have essentially a dictatorship, whatever term is used politically. Could our present society lose 350,000 KIA and remain a “free” nation (which the US isn’t all that much of anymore)? That would be 40% more than America lost KIA during WWII, which was in reality, a near thing for the Allies.

Free enterprise has almost been entirely destroyed here in the US (I was alive and cognizant and of a working age when the US still had that quaint concept. took advantage of it when I was a lad of no more than 8 years old.) I, by the way, was a hard working farm boy back in WWII.

China is, in fact, playing hard ball as MattN says, and it would seem to me as if no one at our federal government, particularly at the State Department, knows how to play that game anymore. Puff-balls at 20 feet would be more like it, for the fools we have put in charge of our government.

But back to the “science” part. When did our colleges and universities stop teaching the fundamentals of physics and chemistry? When was it that fundamental rules of basic arithmetic were abandoned?

As an aside, I had occasion to drive past that new and magnificant highway bridge over the Colorado River just south of Hoover Dam a couple of days ago. It sure was nice to see that at least some civil engineers know what they are up to.

Seeing the levels of economic illiteracy present in this comment thread is seriously disheartening. The prevalence of mythological thinking is nearly complete.

1) Myth The U.S. doesn’t make anything anymore.
Fact The value of U.S. manufacturing output is no. 1 in the world and equals the output of the BRIC nations(Brazil, Russia, India, and China) combined.

2) Myth U.S. corporations are heartlessly exporting all our jobs overseas.
Fact A study of 2500 U.S. corporations over a decade from the early 90s to the early 00s did show them adding 2.8 million jobs offshore, but it also showed them adding 5.5 million jobs in country, a nearly 2:1 ratio. While the prospect of lower cost labor entered into the decision to outsource, the onerous tax, regulation, and litigation environment in the U. S., created by the the same politicians and activists that seek to use the outsourcing to demonize capitalism, was as much or more of a factor in the decisions.

3) Myth China is taking advantage of us by manipulating the Yuan to make their exports to us cheaper( a favorite of the boneheads in the Administration)
Fact By selling us stuff cheap China has been providing us a bigger subsidy than they have through their purchases of T-bills. The money we save on cheap Chinese products is available for more productive uses and allows a better standard of living than we could otherwise afford.

4) Corollary Myth WalMart is the Great Satan
Fact WalMart has done more for low income people than all the deadhead leftists politicians since the Founding of the country all together. The inflation rate for lower tier items that lower income people purchase has been less than the comparable rate for upscale purchases. WalMart has contributed significantly to that fact. When they announced $4 generic prescriptions, virtually the entire pharmacy industry was forced to follow suit. They have been a leader in the move to retail health clinics, which are providing routine medical procedures at rates which even people without health insurance coverage can afford. Employee surveys over the years show that their workers are more satisfied than the employees of their major competitors. The main reason that, despite millions spent to demonize them, the unions have made no headway in organizing their workforce. The pols in Chicago have been fighting their attempts to open stores there for years, despite the strong desire of the population for the stores to be built. Apparently on the theory that it’s better that they have no job, than that they go to work for WalMart.

David Jones: “You really do not want to contemplate what would happen to the US economy (and the rest of the G20 economies) if China dumped all their US Treasury holdings.”

Neither do the Chinese. After two generations of Marxism, they forgot one of the oldest axioms of Main Street (constantly updated for inflation): “Borrow a million, the bank owns you. Borrow a billion, you own the bank.”

The disruption of rare earth mineral exports by China, potentially, is just the tip of the iceberg or a canary in a coal mine.

This is a signal from China and preview of more possible actions to come.

(There are numerous other issues where China could take action adverse to American interests.)

Question, does America respond by belly-aching and doing nothing, or does America take concrete steps in the face of this provocation?

Now, taking concrete steps does mean opeing with an all out trade-war, but it does mean stepped-up diplomacy with the prospect of slowly tightening trade policy if the diplomacy is ignored by China.

Likely, China will not take American diplomacy seriously until some concrete step is taken.

(There are numerous possible actions which could constitute a “first step” to demonstrate American diplomacy is serious and not just lip-service or window dressing designed to placate the American electorate.)

And China’s reaction to this “first step” will be where the “rubber meets the road”, and reveals China’s true intensions, whether China wants to negotiate seriously with America or secretly holds America in contempt.

If China holds America in contempt (this is an open question), then China will economically lash out at America.

Identifying & defining the intensions of your rival, competitor, enemy?, is the first step to effective strategies vis-a-vis that nation.

One thing is for sure, the present status quo is not sustainable for America’s relationship with China — unless you want to see (or don’t care) China assume dominence over America…it’s that simple.